Powerful Music Software Has Industry Worried

By Amy Harmon
The New York Times

March 7, 2000

When the local alternative rock station listed the 300 top songs of the millennium in December, Adam Campbell, a freshman at the University of Oregon, decided it would be nice to own the entire collection.

Two hours later, using the fast Internet connection in his dorm room and a new online service called Napster, Mr. Campbell had retrieved 275 of the tunes -- free. They sit nestled on his computer hard drive along with 800 or so other songs he has accumulated the same way.

"That's three days of continuous music," he notes with pride.

Peter DaSilva for The New York Times
Shawn Fanning developed Napster to help a friend find music files.

The music industry is already disturbed about how easy it is to copy music via the Internet without paying for it.

But in recent months Napster has greatly magnified the threat. Acting like a music search engine, the software makes it easier to find and copy a far wider array of music. It also makes it easier for individuals to offer their own music collections to others.

Napster, created last year by a 19-year-old college dropout, has spread so quickly among college students, traditionally the most avid consumers of recorded music, that the resulting glut of digital traffic has overloaded university networks. Dozens of campuses have banned students from using the service -- not because of copyright issues but to protect their networks.

But Napster is by no means just a college fad. Every day, about a million otherwise law-abiding adult citizens are demonstrating no compunction about using the service to get free what they would have to pay for in a record store. And their numbers are growing rapidly.

Last month, the Recording Industry Association of America filed a lawsuit against Napster, which is based in San Mateo, Calif., seeking damages and an injunction that would effectively shut down the service. Napster argues that it is not liable for music piracy because the service does not keep any of the music files on its own servers. The company says that its software simply allows people to share information. And many of the songs that are traded have been authorized for copying by the copyright holders.

The recording industry says it has no plans to prosecute individual users of Napster, though copyright experts say the industry would have a very strong case. The "fair use" doctrine of copyright law gives consumers the right to make copies of CD's they own for their personal use, and plenty of music fans make tapes or create a duplicate CD for friends without punishment. But Napster complicates matters because it makes copying possible at a much greater order of magnitude.

Whatever the outcome of that case, the popular embrace of Napster has sharpened fears among record industry executives and some artists that the Internet will undermine the control of copyright holders over the distribution of their music.

What is more, the case is being closely watched by television and movie executives, who see it as a glimpse into the future of their industries. While high-quality video files are currently too large to be sent quickly over most Internet connections, high-speed -- or broadband -- services will soon expose other media to the opportunities and threats posed by digital distribution.

For several years, a technology known as MP3 has allowed computer users to compress music into files that are close to CD quality yet small enough to travel quickly over the Internet. But there has not been an easy way to find such music and then make it available to others.

A growing number of people use free or inexpensive "ripping" software to convert their CD's to MP3 format so they can trade music with friends or listen to their own music on their computers. Partly because it is probably illegal and partly because it requires some technical expertise, few take the trouble to make those MP3 files available for others to download.

Napster essentially gives everyone who uses the software access to all the MP3 files on one another's computers that they are willing to share. Napster's own servers simply compile a giant, constantly updated index of all the music available from its users. Users simply type in the song title or name of the artist they are looking for, and Napster generates a list of other users who already have it. (A search yesterday for Korn, Santana and the Beatle's song "Hey Jude," for instance, each yielded more than 100 results). Clicking on one of the selections automatically copies the file from one user's hard drive to the other's.

By linking thousands of PC's into a kind of pirates' cooperative, Napster creates an enormous and continually expanding library of song titles from which its users can pick and choose.

"Once I got Napster, it was just crazy," said Mr. Campbell, who had previously sought MP3 files on Web sites or from friends by e-mail. "It's much more efficient."

Napster's supporters argue that the music industry needs to adapt to the digital world and must accept that it cannot continue making huge profits from traditional retail sales.

"Who's to say that because the music business is structured the way it is structured, that's the way it should always be structured?" said Stewart Alsop, a venture capitalist in Silicon Valley who is considering investing in the company recently formed by Napster's developers.

"If I believe the new model is a better way for artists to operate, that is a moral justification for feeling good about investing in Napster," Mr. Alsop said, "even though technically what they're doing is facilitating illegal behavior."

The record industry counters that if copyrights are not protected on the Internet, artists will have no incentive to create. Moreover, the Recording Industry Association of America sees a crucial distinction between Napster and previous copying technologies.

"There's a difference between you sharing a CD with a friend versus opening up your entire CD collection to everybody in the world to take whatever they want," said Carey Sherman, the industry association's senior executive vice president and general counsel.

But within the music industry there is also growing recognition of a cultural battle that cannot be won in the courts. If today's teenagers are growing up with the perception that music is something that can be had free, the industry fears, copyright laws will become effectively unenforceable.

"There's an incredible disconnect out there between what is normal behavior in the physical world versus the online world," Mr. Sherman said. "There are people who think nothing of downloading entire CD collections on Napster who wouldn't dream of shoplifting from Tower Records. There's just a massive education program that's needed here for people to understand what goes into the creation of music."

A Virtual Music Exchange

A new software program called Napster allows users to quickly find and retrieve music from other Napster users over the Internet. Here is how it works.

A person using a computer opens Napster and asks it to find a song, like “Smooth” by Carlos Santana.

In much the same way a search engine looks for Web sites, Napster searches for computers on the Internet that are also running Napster.

Napster searches those computers looking for MP3 files — a digital format for storing music — that match the request.

Napster lists the files that are available. The user who initiated the search can then download the ones he is interested in by clicking on them.

But some Napster users argue that slashing CD prices might be a better defense than lawsuits and consumer education efforts would be.

"Honestly, I don't think the record companies need the money." said Raquel Poy, 18, a freshman at the State University of New York at Albany. She was using Napster to download Wild Cherry's "Play That Funky Music, White Boy" during a telephone interview last week. "If I were to go out and buy a CD every single time I wanted to listen to something, I would go completely broke."

The industry recognizes that suing consumers for copyright violations would be counterproductive, which is why the it takes aims at services like Napster.

"One of the fastest ways to turn potential customers off is to say they're all a bunch of thieves," said Pam Samuelson, a copyright law expert at the University of California at Berkeley. "You start hating your customers and your customers are going to start hating you back, and that doesn't bode well for your ability to attract them to buy more stuff from you. It makes them more inclined to infringe rather than buy."

Although Napster makes no money at this point, interested investors say there is potentially significant value in the large base of music fans the service has already attracted. For example, Napster could collect subscription fees from its users or persuade record labels to use the service as a marketing vehicle or it could become an e-commerce outlet for CD's and other merchandise.

As a computer science student at Northeastern University in Boston last year, Shawn Fanning conceived of Napster as a way to get his roommate to stop complaining about how hard it was to find the MP3 files he was looking for on the Internet. His solution was a cooperative model.

The Napster software, which is downloaded free from the service's Web site, automates the whole process of cataloging, indexing and enabling the transfer of music files, even though its own computers hold no music files.

Mr. Fanning, who was nicknamed Napster in junior high school because of his hair, is trying to turn the service into a business, financed with money from his uncle and other investors, including Eileen Richardson, a veteran venture capitalist who is acting as the company's chief executive.

But even if Napster prevails in the association's lawsuit, its business model is vague. Paradoxically, its potentially most valuable product would be the data it aggregates on consumers' musical tastes and listening habits -- a potential marketing gold mine for the very record industry that is suing the company.

Ms. Richardson argues that Napster actually spurs CD sales by enabling users to sample artists with whom they might not otherwise be familiar, often resulting in the purchase of a CD.

Napster has declared a desire to work with the industry to promote new artists, but that may not be probable when many record executives liken the service to the getaway car at thousands of crime scenes.

The staff members at Napster's headquarters in San Mateo prefer to compare the program to the early days of the VCR. When the movie industry tried to prevent Sony from selling its Betamax machine because it could be used to make illegal copies of videocassettes, the Supreme Court ruled in favor of Sony, because the machine could be used for a legitimate purpose. In the end, the spread of VCR's resulted in enormous extra profits for the movie industry.

Certainly, a few of the MP3 files traded with Napster's assistance have the blessing of their copyright holders. But the overwhelming majority of Napster's users would appear to be acting illegally.

Technically, Napster is supposed to remove the accounts of those it knows to be distributing copyrighted material. But the company argues that it is not responsible for what its users do with its technology.

"Consumers are going to do what consumers are going to do," said Elizabeth Brooks, the company's vice president for marketing.

Investors agree. Several high-profile Silicon Valley venture capital firms have expressed serious interest in the company.

For a variety of reasons, most Napster users say they simply do not believe they are doing anything wrong.

Alfred Werner, 37, of Oxford, Conn., says he uses Napster to get digital files of the records that he bought in the 1970's but can no longer play for lack of a turntable. "I bought the right to listen to King Crimson 15 years ago," Mr. Werner said. "I'm just making a digital copy of what I have in my closet."

Jeff, a 43-year-old Napster user from Fort Lauderdale, Fla., asked that only his first name be used because he knew that, say, listening to the Grammy-winning Santana single, "Smooth" on MP3 instead of paying $5 for it might be illegal.

"But how illegal is it, really?" wondered Jeff, who owns a small office-cleaning business. "Is it illegal if you go three miles over the speed limit? We used to have a road here and the speed limit was 55, and that was crazy. There was never any traffic, and everybody went 70, and finally they just changed the speed limit. So yeah, you're breaking the law, but how big a law is it?"